What BFCSA Does...

BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide. Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years. For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams. She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.

Cartoon Corner

Denise Brailey

Led by award-winning consumer advocate Denise Brailey, BFCSA (Inc) are a group of people who are concerned about the appalling growth of Loan Fraud around the world. BFCSA (Inc) is a not for profit organisation in the spirit of global community concern and justice.

Denise Brailey has dedicated the past 20 years of her life to being a Consumer Advocate - a voice for the people and former President of RECA (Real Estate Consumer Association. She has helped thousands of investors and is currently President of the BFCSA (Banking & Finance Consumers Support Association). Denise was also awarded and presented with the Rona Oakley Award for Consumer Protection in 2010.

The coming of Aussie quantitative easing
Australian Financial ReviewMay 10, 2019 10.13am
Christopher Joye
The author is a portfolio manager with Coolabah Capital Investments, which invests in fixed-income securities including those discussed by this column.
The Reserve Bank of Australia’s governor Phil Lowe passed our controversial intelligence test with flying colours by surprising many of the best forecasters in the business with his sensible decision to wait on rates.
And contrary to claims at the time, this has no ramifications for the RBA’s inflation targeting regime—whether it goes in June, July or August does not make a jot of difference to the ensuing economic outcomes.
While I personally felt Lowe would be mad to go in May, immediately prior to the meeting I was torn on what he would do in practice. Based on both the RBA’s past behaviours (where it has not hesitated to pull the trigger close to...

Life after Libor: be prepared or risk financial meltdown, ASIC warns
The Australian 12:00am May 10, 2019
Richard Gluyas
ASIC has warned chief executives of a possible financial meltdown unless they adequately prepare for the likely demise of the global benchmark interest rate Libor in 2021.
In an alert reminiscent of the Y2K information technology scare that ultimately failed to ­materialise, the watchdog has written to CEOs of the nation’s top financial institutions to seek an assurance that they understand the risks associated with a global move to new benchmarks that were less vulnerable to ­manipulation.
“The transition away from Libor may have significant implications for the entities’ risk management, operational processes and information technology infrastructure,” the letter said.
“Insufficient preparations for the transition could have a negative impact on the entities’ business, clients and the markets in which they operate.” The letter, which was strongly supported by the Reserve...

Construction jobs casualty of property market downturn
The Australian 12:00am May 8, 2019
Turi Condon
The housing downturn is flowing through to job losses in the construction sector with employment in the industry falling at its steepest rate in nearly six years, according to the Australian Industry Group/Housing Industry Association construction index.
Activity in the construction industry weakened further in April with the index falling 3 points to 42.6 for the month. Readings below 50 show falling activity. Employment fell 6.9 points to 39.2.
“The housing and apartment sectors both remain firmly in negative territory and commercial construction recorded a ninth month of contraction,” Ai Group head of policy Peter Burn said.
Weakness in the sectors was partially offset by an expansion in engineering construction on the back of large-scale publicly funded infrastructure projects. But Dr Burn said there was little sign of any near-term improvement.
“There are now strong...

Big banks on war path over NZ central bank’s bid to raise minimum capital
The Australian 12:00am May 9, 2019
Richard Gluyas
The nation’s big four banks are on a collision course with the Reserve Bank of New Zealand, and judging by the hostile rhetoric there’s no sign of the combatants taking a backward step.
Final submissions are due by May 17 on the RBNZ’s proposal to increase minimum capital requirements by $13 billion-$16bn for the three banks that reported half-year results over the last week — ANZ, National Australia Bank and Westpac. The central bank is due to make a final decision by September.
The stakes are enormous given the big four earn 15 per cent of their combined profit, or $4.4bn, in NZ — a market where they control 88 per cent of industry assets.
The combative tone adopted by the banks, set by ANZ chief executive Shayne...

Westpac ‘outlier’ on loan approvals, ASIC case told
The Australian May 9, 2019
Joyce Moullakis
Westpac has conceded it was an outlier among its rivals in the way it assessed a borrowers’ ability to repay interest-only loans before changing its policy in mid-2015.
On the third day of a Federal Court battle against the Australian Securities & Investments Commission, the regulator’s lawyers peppered Westpac managers with questions seeking to establish that the bank didn’t adhere to responsible lending obligations.
Jeremy Clarke SC, for ASIC, argued that from 2011 to 2015 Westpac didn’t make an adequate assessment of customers’ ability to repay mortgages when they changed from interest-only to principal and interest.
Westpac’s Robert Love, head of credit risk optimisation, admitted the bank had been an outlier in how it assessed those loans but noted the process had changed following an internal review.
“We saw this change as an enhancement to...

Australia's riskiest suburbs for home loans revealed as banks push for higher deposits
ABC News9 May 2019
Kathryn Diss
A new crackdown on property lending has emerged in the wake of the Banking Royal Commission, with borrowers now being asked for deposits of up to 30 per cent and banks throwing greater scrutiny on location and living expenses when assessing loans.
The pull back on new finance comes in the wake of a scathing assessment of the nation's banks delivered by Commissioner Kenneth Hayne.
But the squeeze on credit has coincided with tumbling house prices on the east coast, creating what analysts have branded a "perfect storm" for borrowers trying to access finance.
While the biggest changes to lending standards happened between 2015 and 2017, banks have continued to bolster their assessment processes, now giving a specific focus to the living expenses of borrowers.
In addition, data obtained by the...

Australian savers doomed to be worse off after forecast interest rate cuts
ABC News 9 May 2019
David Taylor
Millions of Australians who have stashed money at their local bank branch could soon be earning next to nothing, if the Reserve Bank cuts interest rates as expected.
"It's potentially a gigantic issue," CLSA banking analyst Brian Johnson warned.
Despite enormous pressure from financial markets, the Reserve Bank held its nerve on Tuesday and left the cash rate unchanged at the record low level of 1.5 per cent.
But most economists expect it will cut the cash rate this year, probably twice.
Normally when the Reserve Bank cuts the cash rate the banks follow suit by passing that rate cut onto borrowers.
Mr Johnson said that was even more likely now in the wake of the banking royal commission.
"When you think of the politics of where we are right now,...

Austerity 'populism' burdens households, RBA: PIMCO
Australian Financial ReviewMay 9, 2019 12.32am
Jonathan Shapiro
Global bond giant PIMCO says the Australian economy will remain reliant on ultra-low interest rates and a highly geared consumer until politicians can achieve a better mix of fiscal and monetary stimulus.
The $2.5 trillion fund’s Australian portfolio management head, Robert Mead, says a failure of governments to borrow money to spend on productive investments such as infrastructure represents poor economic management and will only serve to increase the burden on monetary policy at a time when the economy is weakening.
“It has been a populist approach to balance budgets, which is all good in a perfect world, but we are not living in that world,” Mr Mead told The Australian Financial Review.
“This is a world where the consumer has been asked to do all the borrowing and somehow that is OK, and we have...

Austerity 'populism' burdens households, RBA: PIMCO
Australian Financial Review May 9, 2019 12.32am
Jonathan Shapiro
Global bond giant PIMCO says the Australian economy will remain reliant on ultra-low interest rates and a highly geared consumer until politicians can achieve a better mix of fiscal and monetary stimulus.
The $2.5 trillion fund’s Australian portfolio management head, Robert Mead, says a failure of governments to borrow money to spend on productive investments such as infrastructure represents poor economic management and will only serve to increase the burden on monetary policy at a time when the economy is weakening.
“It has been a populist approach to balance budgets, which is all good in a perfect world, but we are not living in that world,” Mr Mead told The Australian Financial Review.
“This is a world where the consumer has been asked to do all the borrowing and somehow that is OK, and we have a government...

Australian savers doomed to be worse off after forecast interest rate cuts
ABC News 9 May 2019
David Taylor
Millions of Australians who have stashed money at their local bank branch could soon be earning next to nothing, if the Reserve Bank cuts interest rates as expected.
"It's potentially a gigantic issue," CLSA banking analyst Brian Johnson warned.
Despite enormous pressure from financial markets, the Reserve Bank held its nerve on Tuesday and left the cash rate unchanged at the record low level of 1.5 per cent.
But most economists expect it will cut the cash rate this year, probably twice.
Normally when the Reserve Bank cuts the cash rate the banks follow suit by passing that rate cut onto borrowers.
Mr Johnson said that was even more likely now in the wake of the banking royal commission.
"When you think of the politics of where we are right now,...

Austerity 'populism' burdens households, RBA: PIMCO
Australian Financial ReviewMay 9, 2019 12.32am
Jonathan Shapiro
Global bond giant PIMCO says the Australian economy will remain reliant on ultra-low interest rates and a highly geared consumer until politicians can achieve a better mix of fiscal and monetary stimulus.
The $2.5 trillion fund’s Australian portfolio management head, Robert Mead, says a failure of governments to borrow money to spend on productive investments such as infrastructure represents poor economic management and will only serve to increase the burden on monetary policy at a time when the economy is weakening.
“It has been a populist approach to balance budgets, which is all good in a perfect world, but we are not living in that world,” Mr Mead told The Australian Financial Review.
“This is a world where the consumer has been asked to do all the borrowing and somehow that is OK, and we have...

Fact check: Employment in Australia is worse than you think
MichaelWest.com.auMay 6, 2019
Alan Austin
Alan Austin is a freelance journalist with interests in news media, religious affairs and economic and social issues.
In case RMIT/ABC Fact Check have missed this, Alan Austin analyses the facts and refutes the claims by the Coalition that it has served workers well and is the better economic manager.
VIRTUALLY THE entire developed world has enjoyed a phenomenal boom in investment, jobs and profits since 2014. Only a few poorly-managed economies have missed out on near-record employment growth. That dismal group includes Australia.
Comparable countries
The biggest winners in the jobs boom over the last five years have been the economies whacked most severely by the 2008 Global Financial Crisis (GFC). Spain’s jobless rate has tumbled from 26.09 per cent of the work force in 2013 down to 14.70 per cent now. More than...

Westpac defends lending habits
The Australian 12:00am May 8, 2019
Anthony Klan
Westpac has criticised the corporate regulator’s enforcement of responsible lending laws as a “new idea” and says its wronged borrowers could make lifestyle changes to meet repayments in its defence of allegedly breaking lending laws more than 260,000 times.
Fronting the second day of hearings in the Federal Court in Sydney, lawyers for Westpac said the bank had “done its utmost to meet its legal requirements” and that it was not in the bank’s interests to make loans to borrowers who could not afford them.
The Australian Securities & Investments Commission has claimed Westpac engaged in a “systemic approach” of ignoring the living expenses that borrowers declared when applying for loans 261,987 times between December 2011 and March 2015.
ASIC and Westpac had agreed the bank would pay a $35 million penalty, however last November the Federal Court...

Fitch: RMBS investors spooked by housing crash
MacroBusiness 12:15 pm on May 8, 2019
David Llewellyn-Smith
Via Fitch today:
Housing Downturn Fears Escalate: Within the space of a year, falling house prices have risen to be the most serious threat to Australian credit markets, according to Australian fixed-income investors. Fitch Ratings’ 2Q19 survey reveals that 70% of investors rank a domestic housing-market downturn as the top risk to Australian credit markets over the next 12 months. When we asked the same question a year ago as part of our 2Q18 survey, only 29% of investors rated a housing downturn as a high risk.
Weak House-Price Outlook: The vast majority (95%) of investors expect house prices to keep falling over the next 12 months –15% foresee falls of greater than 10%, while not one investor believes prices will rise. In light of this, it is no surprise that investors assess...

Will the house price collapse result in a recession?
UNSW Newsroom 08 May 2019
Julian Lorkin
Policies proposed for the federal election risk making a bad situation worse, says UNSW Business School's Jonathan Reeves.
“If the current downward house price trend continues at a similar rate for the remainder of this year, this will take the fall past 20 per cent from the peak,” says senior lecturer Jonathan Reeves from UNSW Business School. “How far house prices will drop will depend on the level of timely fiscal stimulus provided by government.”
Property prices fell in every capital city except Canberra last month, with Sydney and Melbourne continuing to lead the annual price declines. There were double-digit falls over the past year, including a 0.7 and 0.6 per cent decline respectively in April.
Dr Reeves feels some policies suggested ahead of the forthcoming federal election may exacerbate the declines.
“Proposals to...

ASIC tallies Westpac’s responsible lending law breaches
The Australian 12:00am May 7, 2019
Anthony Klan
Westpac broke responsible lending laws more than 260,000 times in just over three years, the corporate watchdog had told the Federal Court in Sydney this morning.
Lawyers for the Australian Securities & Investments Commission said between December 2011 and March 2015, Westpac engaged in a “systematic approach” of ignoring the living expenses loan applicants had stated on application forms. Instead it relied on broad living expense “benchmarks”, which, if they were true, would in some cases have meant the loan applicant was already living on, or close to, the poverty line, ASIC told the court.
ASIC said Westpac failed to properly verify the actual financial positions of borrowers a total of 261,987 times.
In 154,351 of those cases, the bank also failed to use correct figures when assessing if borrowers taking out interest-only loans could...

Foreign banks 'distort' home loan market
Australian Financial Review May 6, 2019 5.18pm
James Frost, James Eyers
Westpac says foreign banks and non-banks are creating “distortions” in the market as they chase market share unencumbered by the restrictions placed on mainstream lenders.
Westpac chief executive Brian Hartzer said he expected the situation to normalise, but for the time being the regulators remained almost exclusively concerned with the activities of the big four banks.
“We are certainly seeing very aggressive growth in the home loan market from foreign banks and I should also say non-banks” Mr Hartzer said.
“My sense is that regulators don’t like distortions in the market and this will return to normal over time.”
Westpac’s first-half result was marred by the comparatively weaker performance of the consumer bank, where cash earnings fell 11 per cent to $1.5 billion.
Net operating income fell 10 per cent from the previous...

Desperate savers create 'diabolical' dilemma for banks
Australian Financial Review May 6, 2019 7.30pm
Duncan Hughes, James Eyers
Ultra-low interest rates on online savings and transaction accounts have created a "floor" that will make it more challenging for banks to manage additional cuts to official interest rates, the chief financial officer of Westpac Peter King warns.
Mr King was speaking after Westpac reported a 22 per cent lower half-year profit and as analysts flagged concerns that savers will suffer if the Reserve Bank reduces the official cash rate to 1.25 per cent.
While the major banks offer term deposits where interest rates averaging 2.3 per cent could still be cut further on the back of an RBA cut, many deposits are held in accounts paying much lower interest.
For example, of Westpac's total deposits of $512 billion, $146 billion, or 29 per cent, is held in transaction accounts which pay...

Nicholas Moore exits Macquarie with $27.9m payout
The Australian 12:00am May 4, 2019
Joyce Moullakis
Macquarie Group’s former boss Nicholas Moore has departed the Millionaire’s Factory with a $27.9 million bumper payday, and continues to “provide services” to the asset manager and investment bank.
Macquarie’s annual report, released to the ASX, showed Mr Moore’s exit pay sitting at $27.9m, including total direct remuneration for his time as CEO during Macquarie’s 2019 year of $13.6m.
His retirement at the end of November spurred the bringing forward of previous-year share awards of about $18.2m, boosting the final payday.
That figure relates to retained pay since 2011, the vesting of which was accelerated because of Mr Moore’s departure.
The payment included a salary of $554,645, short-term bonuses of $3.2m and equity awards including shares of $20m.
Mr Moore also has $81.5m, as at the March 31 Macquarie share price, of restricted share units....

NAB, Clydesdale sued in UK over business loans
The Australian 7:18am May 3, 2019
Kirstin Ridley (Reuters)
About 150 companies have launched a London lawsuit against Britain’s Clydesdale Bank and its former owner, National Australia Bank, alleging they were deceived when they took business loans from the bank up to 18 years ago.
RGL Management, a company managing the group claim for the small and medium- sized businesses, said it expected to add hundreds more claimants to the lawsuit by year end and recover hundreds of millions of pounds in losses.
James Hayward, the CEO of RGL Management, said Clydesdale’s conduct towards its customers has been “utterly disgraceful”.
He said RGL had also instructed lawyers in Scotland, where Clydesdale is based, to bring proceedings as soon as legislation is changed to allow group claims there.
A spokeswoman for Clydesdale said the bank had yet to receive details of the case....

Westpac to continue bank profit pain
Australian Financial Review May 6, 2019 12.00am
Lucas Baird
Westpac won't cut its interim dividend despite a growing bill for customer refunds, but investors and analysts will be looking anxiously at half-year results on Monday for signs of further pressure on the bank's local revenue and earnings.
Westpac's interim profit will follow on from ANZ and NAB last week, which showed that the slowing housing market was weighing heavily on the profitability of their Australian operations.
Analysts are expecting Westpac will report a cash profit of about $3.3 billion for the six months to March 31, which would represent a fall of 22 per cent on forecasts from Macquarie Research. Last week the financial services giant announced it would set aside $753 million to refund customers and to restructure its wealth division in the wake of the banking royal commission.
Morningstar analyst David Ellis...

IOOF skimmed super members: APRA
Australian Financial Review May 1, 2019 12.00am
James Frost
Former IOOF managing director managing director Chris Kelaher ran the financial services company like a personal fiefdom and once unilaterally refused a request from Optus to move its staff super fund elsewhere without a reason, according to court documents.
The allegations are contained in a 190 page statement of claim bound for the Federal Court where Australian Prudential Regulation Authority is seeking to have five of IOOF’s former and current directors and executives banned from acting as superannuation trustees.
APRA also alleges that IOOF broke the law when it sought to fix its mistakes by compensating customers with more than $5 million in funds taken from the members own reserves instead of penalising itself for making the mistake. It says raiding the members reserves demonstrated a failure or unwillingness to understand its obligations.
APRA compared the...

Westpac hit by $510m provision, and Hayne compo costs could rise
Australian Financial Review Apr 30, 2019 6.22pm
James Eyers
Failings by financial advisers operating under Westpac Banking Corp's licence have triggered a $510 million pre-tax provision and the bank has flagged compensation bills could rise even higher.
Chief executive Brian Hartzer described the $357 million after-tax hit to the first-half profit as "disappointing" but said it was part of Westpac's efforts to mop up "outstanding issues" in the scandal-prone financial advice sector.
Before its first-half profit numbers were released on Monday, Westpac said advisers operating under its Magnitude and Securitor licences would trigger "potential repayments" to customers of $297 million. This is more than the $260 million by which first-half profit will fall due to the conduct of the bank's own salaried advisers, announced on March 25.
The customer repayments for misconduct by "authorised representatives" represent 31 per cent...

ANZ flags 'stubbornly low' wages as mortgage stress climbs
Australian Financial Review May 1, 2019 10.51am
James Eyers, Sarah Turner
ANZ Banking Group chief executive Shayne Elliott is concerned about a spike in customers struggling to repay their mortgages, warning "stubbornly low” wage growth in a weakening housing market could prompt more defaults.
ANZ said on Wednesday that 5 per cent of its home loans are in negative equity as at March, non-performing loans have ticked up and mortgages more than 30 days due had risen sharply.
The bank told analysts during a briefing the spike in short-term bad debts reflected borrowers taking longer to work out their financial situation as housing prices fell.
“The market will be nervous about the sharp deterioration in mortgage arrears in our view,” said UBS analyst Jonathan Mott.
The rise in mortgages more than 30 days overdue to around 2.25 per cent as at...

Developers exploiting loophole on property advice
Australian Financial Review Apr 30, 2019 6.26pm
Duncan Hughes
Developers are exploiting a regulatory loophole to offer lucrative commissions to accountants, financial advisers and mortgage brokers for recommending real estate, according to industry specialists.
The regulatory gap excludes real estate as a financial product, or investment, which means advisers can lawfully accept more than 8 per cent commission to recommend property, or more than three times the usual rate.
Some advisers failing to rebate part, or all, of the commission payments are also disguising the windfall by disclosing payments as consultancy, or marketing fees, in statements provided to clients, according to industry specialists.
“Ethical financial advisers abhor the commission offerings that are being continuously sent to us,” said Paul Moran, principal financial planner with Moran Partners. “There are a lot of people masquerading as financial advisers who are fundamentally accountants or mortgage brokers. Wearing...